By Claudia Assis and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures slipped below $1,600 an ounce Wednesday as signs of progress on U.S. and European debt issues prompted investors to sell the metal after its steep recent climb.
Gold pared its losses, however, after disappointing housing data.
Gold for August delivery GC1Q -0.29% fell $3.60, or 0.2%, to $1,597.60 an ounce, extending its decline after modest losses in the Tuesday session and after a journey into record territory recently.
Gold nosedived in electronic trading Tuesday after U.S. President Barack Obama said there has been “some progress” in talks with lawmakers on raising the U.S. debt ceiling. Read full report.
The fall in gold prices also came as worries over the Greece debt situation eased on comments Tuesday by an European Central Bank governing council member.
On Wednesday, housing went back to worrying investors. After a good showing for housing starts the previous day, existing-home-sales data disappointed.
Sales of existing U.S. homes slipped 0.8% in June to their seven-month low, the National Association of Realtors said Wednesday. Read more about the report.
Europe uncertainty
Some analysts said gold prices should still find support from uncertainty over Europe’s future.
Gold prices could be supported in the “very near-term and ahead of the special EU summit on July 21, with financial markets already unnerved by the apparent lack of urgency among policy makers in the euro zone,” Credit Agricole strategist Robin Bhar said in a note to clients. There is “no reason to sell gold in the current environment,” he added.
Most metals tracked gold lower, but also pared losses as the trading day progressed.
September silver SI1U -1.46% declined 43 cents, or 1%, to trade at $39.82 an ounce. The contract had lost more than 4% earlier. Read more on what the gold-silver ratio says about silver’s value.
“Even if we assume further price rises for precious metals in the long term, a boom is not a one-way street and the optimism on gold and silver especially was excessive recently in our view,” analysts at Commerzbank said in a report.
The largest silver-backed exchange-traded fund, iShares Silver Trust SLV +1.53% , registered 191 metric tons of inflows on Tuesday to 9,864 metric tons.
The SPDR Gold Trust GLD +0.54% , the world’s largest ETF backed by gold, reported outflows of 3.3 metric tons to 1,246 metric tons.
“In the medium to long term, support for gold and silver will come from production problems, which are currently curbing the expansion of supply, in addition to the persisting sovereign debt issue,” the Commerzbank analysts said.
Copper for September delivery HG1U -0.74% declined 3 cents, or 0.9%, to $4.43 a pound.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
